Iseq follows European stocks down

The Iseq index of Irish shares closed down half a per cent on the previous day, in line with the major indices across Europe.

Stock markets across Europe were volatile for a period around lunchtime, following remarks by Federal Reserve chairman Ben Bernanke indicating that additional monetary stimulus, or quantitative easing, may be needed to boost the US economy.

But fluctuations in the middle of the day soon stabilised, leaving stocks to trend sideways for the rest of the afternoon.

With selling pressure on banks across Europe, AIB and Bank of Ireland were among the weakest stocks on the Iseq. AIB fell 4.2 per cent to 41 cent, down 1 cent, on far from spectacular volumes.

Bank of Ireland, which was active in the bond market, raising £300 million in funds, fell 3.4 per cent to 59 cent, down 2 cent. The bank's government-guaranteed bonds were priced to yield 440 basis points more than the benchmark mid-swap rate and 500 basis points above the gilt rate.

Dealers noted that the completion of the fund-raising should be viewed as a positive for the bank, despite the high price paid and the government backing.

Irish Life & Permanent rose 1 cent to €1.57, as the market awaits the outcome of the EBS bidding process, in which the company is one of the interested parties.

There was little action in building materials group CRH, which drifted down 9 cent to €12.00 in line with movements in its sector, while cement company Readymix, which is subject to a takeover approach by an unknown suitor, rose 13 per cent to 26 cent. Dealers commented that there were few sellers in the stock.

Tullow Oil announced an extension of their debt facility, which would generally be regarded as a positive development, although its stock closed down 1 per cent at €14.53.

There was some buyer interest in drinks group C&C, which climbed 2 cent to €3.25, as the company talked up its advances in the British cider market to investors.